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The Windows 8 Battle Moves from Software to Devices

Last week, Microsoft confirmed that it would reinstate normal pricing for Windows 8 Upgrade packages as previously promised, setting off a bizarre and undeserved wave of outrage and criticism from tech enthusiasts. But Microsoft is right to “raise” prices on the Windows 8 Upgrade versions, which are aimed at legacy PCs anyway. And with this move, the battleground for the future of computing switches from these legacy PCs to a new generation of highly mobile and touch-centric devices.

To understand the issues here, let’s step back for a moment and review Microsoft’s goals with Windows 8 and its plans for the future.

It might be apocryphal, but I’ve been told by Microsoft insiders of a 2009 CES visit by then Windows head honcho Steven Sinofsky, who saw people trying to touch all of the screens at the show. He immediately fired off an email to his lieutenants, telling them to get to Las Vegas immediately to see it for themselves: “There are fingerprints everywhere,” he allegedly wrote. Windows would need to be adapted to this new way of doing things immediately.

In a move that literally has no precedent at Microsoft, Sinofsky and crew developed a new version of Windows that includes a completely new runtime engine, user interface, and apps platform. In fact, even calling this thing “Windows” is a bit of a misnomer since it is in fact a completely new mobile platform whose only technical relation to traditional Windows versions is its NT core and underpinnings.

But of course, this is Microsoft, the firm that invented the term “no upgrade left behind.” So the Windows team melded this new mobile platform with an updated version of the traditional Windows desktop and called it Windows 8. The resulting OS is really two OSs in one, with separate user experiences, apps, and goals, a hybrid OS that will bridge the gap between the past -- legacy PC form factors and desktop computing -- and the mainstream computing future of touch-centric mobile devices such as tablets.

As an aside, I know there will always be those who refuse to believe that multi-touch mobile devices will overtake traditional PCs and do so quickly. But know this: Microsoft feels so strongly that this movement will happen very quickly that it pushed to release Windows 8 to head off what it sees is a steep decline in traditional PC sales, and a huge upswell in sales of tablets and other new mobile computing form factors. Microsoft doesn’t change Windows this radically arbitrarily. In fact, a traditional complaint about Windows is that it doesn’t change enough.

Anyway, what we’re left with is Windows 8, a curiously weird new hybrid OS that features what Microsoft calls a “touch-first” user experience but also runs on traditional PCs and even offers what I think of as a pretty fine set of improvements on such machines. The weirdness, of course, comes from its hybrid nature, and many traditional PC users are bristling that they have to put up with touch-centric user interfaces that aren’t quite a natural fit on their PCs.

Knowing that Windows 8 would be a tough sell to these users, Microsoft announced last year that it would offer its best-ever upgrade promotion for a major new Windows release. For the three-month period between the Windows 8 launch in late October 2012 and the end of January 2013, anyone with a PC that could run Windows 8 (i.e., any PC that came preinstalled with Windows XP, Windows Vista, or Windows 7) would be able to upgrade electronically to Windows 8 Pro, the highest-end retail version of the system, for just $40 (in the US). This represents a $160 savings over upgrade pricing for its predecessor, Windows 7 Professional. And it’s an even better deal than the Windows 7 Family Pack -- three copies of the mid-level Windows 7 Home Premium Upgrade for $150 -- that Microsoft offered three years earlier, also for a limited time.

Microsoft was widely praised for this offer, for obvious reasons. But many apparently feel that the promotional Windows 8 Upgrade should continue forever, and the firm has no right to return to its normal upgrade pricing scheme, as it announced it would do late last week. In fact, the outrage and indignation was immediate and fairly violent, if Twitter and my email and blog comments are any indication. How dare they!

What people seem to forget is that the Windows 8 Upgrade was aimed at a very tiny percentage of the PC-using population: Users interested in and willing to upgrade their working PCs to a new Windows version, a process that is fraught with potential problems thanks to the myriad of hardware configurations out there in the real world. That is, this is not a mainstream activity. And while there are obviously some people interested in doing this, Microsoft clearly milked that potential market during the three-month promotional upgrade timeframe. There’s little excuse for anyone who wants this cheap pricing not to have already gotten it.

But the bigger issue no one seems to understand is that Microsoft only cares about upgrades to a point. Remember that Windows 8 is a bridge to that ultra-mobile, touch-centric computing future, and that the Windows 8 experience on new PCs is good, even an improvement over Windows 7 in some ways, but also not optimized for traditional PCs. Once the potential market for PC upgrades has expired -- as it soon will, or arguably already has -- Microsoft and its partners can and should turn their attention to the volume market that matters: New device sales. And while the new hardware offerings at launch late last year weren’t great, a coming new “second” generation of devices just now hitting the market in volume is far more interesting.

I’m looking forward in particular to Microsoft’s Surface with Windows 8 Pro, which looks to combine most of the advantage of Surface RT with fixes to that earlier device’s biggest problems: Compatibility and performance. But this isn’t just about Surface. Traditional PC makers and new hardware device makers are pushing the hybrid nature of Windows 8 with their own unique lines of hybrid mobile computing devices. These companies, along with Microsoft, are betting their futures on their success.

And that’s why the upgrade situation is really just an issue of our own making, a bit of faux indignation from a crowd that knew the schedule up front and then reacted with horror when Microsoft simply implemented it. I don’t know what the future will hold, and while I do expect Microsoft to handle future upgrades on devices quite a bit differently, the Windows 8 Upgrade is only for legacy PCs anyway.

The real battle awaits, folks. And if these innovative and often crazy new Windows devices take off in the market, then Windows gets a new lease on life. If not, it will swoon into a decline that will see slow-moving businesses left as Microsoft’s only major market, while rival mobile platforms -- iOS and Android, most likely -- take over personal computing.